The Australian economy has proven resilient to the shocks of COVID-19. In the recovery from the pandemic-induced recession, unemployment levels have returned to pre-pandemic levels and housing prices have continued to rise, as have some household’s savings.

The COVID-19 pandemic had an unequal impact on Melburnians. While many suffered job losses, others were able to substantially increase their household savings.

This unequal impact has further exacerbated Melbourne’s existing income inequality.

A city’s urban form influences access to employment, education, and health opportunities. This has the potential to create areas of more advantage and less advantage across the city.

In the case of COVID-19, our analysis found that Melbourne’s urban form influenced how the virus transmitted across the city and exacerbated existing income disparity. Growing inequality can pose greater risk of instability and intolerance; and worsen economic outcomes for all.

It can act as a brake on economic productivity and can increase the demand for government services in areas such as health, education, social services and justice.

How COVID-19 spread across Melbourne’s landscape

The changing demography of Melbourne's COVID-19 waves.

The first wave was introduced by overseas travellers living in the city’s more affluent local government areas. Lockdowns and hotel quarantine meant low numbers and small instances of community transition.

The second wave started when hotel quarantine workers were infected at work.

Many of the quarantine hotels are located in the CBD, yet many workers would be considered non-office workers and be required to travel to their place of work.

Our analysis indicates that there’s a strong correlation between high rates of community transmission in an LGA, and the number of non-office workers in that LGA that commute to the CBD for work.

This was particularly evident in Melbourne’s west and north, suggesting a number of quarantine hotel workers lived in these areas.

The west and north were more heavily impacted during the second wave. Brimbank, Hume, Melton and Wyndham LGAs accounted for the largest numbers of COVID-19 cases between 1st May and 22nd June 2020. They are also considered some of Melbourne’s least advantaged areas.

As a general rule, non-office workers cannot work remotely, they need to travel to their workplaces. The travel patterns of Melbourne’s non-office workers helped further seed the virus in Melbourne’s west and north as they travelled within these areas to work.

This trend was further demonstrated during Melbourne’s fourth wave, with the north again accounting for a higher proportion of cases.

Widening income inequality

Positive pandemic outcomes are not spread out equally across communities.

What began as a health crisis, soon morphed into an economic one, with Melbourne’s less advantaged households hit harder.

Some businesses had to make significant job cuts and many of these were in lower income industries, indicating that many lost jobs were likely held by workers of less advantaged households.

Industries such as hospitality and retail trade which were hit hard. Given the casualised nature of the workforce and qualification test around tenure of employment for casual workers, a large proportion of the workforce were ineligible for JobKeeper.

Many office workers, who are also higher income earners, were able to work from home and save on commuting costs, whereas many non-office workers still had to pay their usual work related transport costs.

Victoria experienced a positive household savings in 2019/2020 to $8.6bn in savings (from a net debt of $13.7bn in the year prior). These savings were not shared by all households.

In August 2020, 23 percent of Australian households reported that they would not be able to raise $2000 within a week.

Short breaks in employment can have considerable effects on superannuation further down the line. Compounding this loss was the government's early access to super amounts.

There was also a marked difference in the distribution of COVID-19 related fines handed out in less advantaged areas, in part driven by the need for workers in these areas to travel for work and earn a wage.

While the Australian economy might be bouncing back from the pandemic, the benefits of the recovery are not being shared equally across communities.

The opportunity

KPMG recommends that policy makers:

  • Identify the lessons that can be learnt from managing this pandemic now and in the future, in terms of how relative disadvantage – and in particular, the need to continue to travel to work – can influence the chain of transmission. Similar patterns of transmission have emerged in the June/July 2021 COVID-19 wave in Sydney. The virus has taken hold in relatively less advantaged parts of Sydney where many people may need to continue to travel for their jobs.
  • Subject to public health advice, some of these lessons may also be relevant for maximising the efficiency of the COVID-19 vaccine roll out by prioritising households from less advantaged areas that will need to continue to travel to work.
  • Ensure any future stimulus and support focuses on sectors that employ workers from less advantaged households.
  • Encourage economic development and employment close to those LGA’s hardest hit by the pandemic to support job accessibility.
  • Invest in transport and social infrastructure that improves job accessibility, particularly for Melbourne’s less advantaged areas.
  • Consider opportunities to address the financial gaps that the pandemic has exacerbated, particularly in respect to household savings and superannuation.

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